Michigan Lost Title Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain a Michigan Lost Title Bond

At a Glance:

• Lowest Cost: $100 per year
• Bond Amount: Twice the fair market value of the vehicle
• Who Needs it: Vehicle title applicants in Michigan who do not have adequate proof of ownership
• Purpose: To ensure the rightful vehicle owner does not suffer financial harm if the title applicant does not actually own the vehicle
• Who Regulates Lost Title Bonds In Michigan: The Michigan Secretary of State

Background

Michigan statute 257.217 requires residents who do not have adequate proof that they own their vehicle to purchase a surety bond prior to obtaining a duplicate title. The Michigan legislature enacted the bonding requirement to ensure that the rightful vehicle owner will receive compensation if the title applicant does not actually own the vehicle. The bond will be active for three years from the date of issuance and must be in an amount equal to twice the vehicle’s fair market value.

What is the Purpose of the Michigan Lost Title Bond?

Michigan requires residents to purchase a surety bond as part of the application process to obtain a bonded title. The bond ensures that the rightful vehicle owner will not suffer a financial loss if the title applicant is seeking to obtain the title fraudulently. If the title applicant is engaging in fraud, then the rightful vehicle owner can file a claim against the bond and receive compensation up to the full amount of the bond. In short, the bond acts as a safeguard against people attempting to obtain ownership of a vehicle through unethical means.

How Can an Insurance Agent Obtain a Michigan Lost Title Bond?

BondExchange makes obtaining a Michigan Lost Title Bond easy. Simply log in to your account and use our keyword search to find the “title” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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How is the Bond Amount Determined?

Michigan statute 257.217 dictates that the bond amount must be equal to twice the vehicle’s fair market value. To determine the vehicle’s value, title applicants can have their vehicle appraised by any licensed Michigan auto dealer or utilize any recognized vehicle appraisal guide.

Is a Credit Check Required for the Michigan Lost Title Bond?

Surety companies will not conduct a credit check for bonds that are less than $25,000. At limits over $25,000, surety companies will review the applicant’s credit standing to determine qualification for the bond. For larger bond amounts, applicants with poor credit may be subject to a higher rate. Generally, most carriers want to understand how the applicant came to have ownership of the vehicle.

How Much Does the Michigan Lost Title Bond Cost?

The Maine Lost Title Bond costs either $100 or 1.5% of the bond amount, whichever is greater (rates may vary for bonds greater than $25,000).

Who is Required to Purchase a Bond?

The Michigan Secretary of State will require a title applicant to purchase a surety bond if the applicant cannot present the department with adequate proof that the applicant does in fact own the vehicle. Typically, lost title bonds are required for the following reasons:

• The vehicle has never been titled
• The applicant never received the title
• The previous owner never titled the vehicle
• The applicant has the title but there is an error in the title transfer
• The applicant purchased an unclaimed/abandoned vehicle and is not a bonded agent

If the title applicant cannot locate the vehicle’s previous owner/title, they will not need to purchase a surety bond in the following scenarios:

• They have received ownership of the vehicle through a court order
• The vehicle is over 10 years old and is valued at $2,500 or less

How do Michigan Residents Apply for a Bonded Title?

To apply for a bonded title, Michigan residents must complete the following steps:

Step 1 – Consult the Secretary of State

Bonded title applicants in Michigan should consult their local Secretary of State branch office prior to purchasing a surety bond. Michigan does not require all title applicants to obtain a bonded title, and usually only does so as an absolute last resort. Title applicants should ensure that they actually need a bond before purchasing one.

Step 2 – Determine the Vehicle’s Value

After receiving confirmation that they need a bond, title applicants in Michigan should determine the vehicle’s value. To determine the bond amount, title applicants should have their vehicle appraised by a licensed auto dealer or use a recognized vehicle appraisal guide, such as the Kelly Blue Book.

Step 3 – Purchase a Surety Bond

Bonded title applicants must purchase and maintain a surety bond in an amount equal to twice the vehicle’s fair market value.

Step 4 – Complete the Title Application

Bonded title applicants in Michigan can obtain a duplicate title application by visiting their local Secretary of State branch office. The Secretary of State will review the application, and mail the title applicant a bonded title if approved.

How Do Michigan Bonded Title Applicants File Their Bond?

In Michigan, bonded title applicants should submit the completed bond form, including the power of attorney, to their local Secretary of State branch office. The Michigan Lost Title Surety Bond requires signatures from both the surety company that issues the bond and the bonded title applicant. The surety company should include the following information on the bond form:

• The legal name and address entity/individual(s) buying the bond
• Surety company’s name
• Bond amount
• Vehicle information
• Date the bond is signed

What Are the Insurance Requirements for Bonded Title Applicants in Michigan?

Michigan requires all motor vehicle owners to purchase auto insurance with the following minimum limits:

• $50,000 per person
• $100,000 per accident
• $10,000 property damage per accident

Bonded title applicants must purchase and maintain a surety bond in an amount equal to twice the vehicle’s fair market value.

How Can Michigan Residents Avoid Claims Against Their Lost Title Bond?

To avoid claims against their bond, bonded title applicants in Michigan must ensure that they are the rightful owners of the motor vehicle.

What Other Insurance Products Can Agents Offer Bonded Title Applicants in Michigan?

Michigan requires all motor vehicle owners to purchase auto insurance. Bonds are our only business at BondExchange, so we do not issue other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.